December 6, 2004
By Brian M. Riedl
President Bush made tax relief the top domestic priority of his
first term and has signaled that Social Security reform will take
precedence during his second term. Yet, both are endangered by the
same culprit: runaway spending.
The tax relief that has reduced the federal tax burden to $17,000
per household cannot be sustained if Washington continues spending
$20,000 per household, a level not seen since World War II. The
transition costs for Social Security reform become a tougher sell
with every bloated spending bill that pushes the budget deficit
further over $400 billion. Unless spending is peeled back,
President Bush's domestic policy legacy will be higher taxes,
budget deficits and stalled Social Security reform.
Taxpayers, therefore, should be encouraged by the President's
insistence on keeping the omnibus spending bill within the budget
resolution's spending limits. The resolution had capped 2005
discretionary appropriations at $821.9 billion, a 4.5% increase
over last year. Predictably, Senate appropriators demanded to break
the spending cap with an additional $8.1 billion. Although
President Bush has traditionally taken a hands-off approach to key
spending legislation (essentially handing Congress a blank check),
his strong veto threat forced Congress to stay within the $821.9
President Bush also persuaded lawmakers to work within his budget
priorities. While defense was hiked 7%, and homeland security and
international programs each received 10% increases, domestic
discretionary programs were nearly frozen. Following a 24% increase
over the past three years, these domestic programs can clearly
afford to level off for a few years, especially given the nation's
higher national security priorities.
Of course, Congress did resort to some gimmicks. Housing programs
were moved from fiscal years to calendar years in order to shorten
their 2005 time period and "save" $1 billion.
Lawmakers also likely decided not to count $600 million in
additional spending by classifying $300 million in routine home
energy subsidies as "emergency," and by assuming (possibly without
merit) that the crime-victims fund will suddenly earn enough fees
to offset an extra $300 million in spending. And that's not even
counting $14 billion in emergency hurricane spending that was not
offset, and $3 billion in "emergency" farm assistance, despite the
strong year for crops.
Includes supplemental war spending
Source: Office of Management and Budget and The Heritage
Although a 4.5% increase represents progress over the recent
double-digit increases, President Bush and Congress will have to go
further in order to rein in spending. Families looking to cut costs
would not freeze all expenditures equally; they would fully fund
priorities like food, the mortgage payment, and insurance, while
completely eliminating unaffordable luxuries such as vacations and
expensive entertainment. Similarly, Washington should continue
fully funding top priorities, such as defense, homeland security
and a few domestic programs, and terminate unaffordable luxuries
such as the $50-billion corporate welfare budget; $25 billion pork
project budget; $100 billion (at least) in waste, fraud and abuse;
and the hundreds of ineffective, outdated and unnecessary programs.
Better that government perform a few functions well than a hundred
Instead of taking that approach, lawmakers again spent more on
corporate welfare than on homeland security. (The House voted to
eliminate only one corporate welfare program, the Advanced
Technology Program, and then the Senate restored it.) The budget
resolution included no requirements for committees to reduce waste,
fraud and abuse. And lawmakers refused to take up legislation to
create a government-waste commission that would operate like the
successful military base-closing commissions of the late
Worst of all, Congress once again made a mockery of fiscal
responsibility with 11,000 pork projects that will cost taxpayers
$25 billion this year. This includes money for the Baseball Hall of
Fame ($450,000), the Grammy Foundation ($150,000), a mariachi
music-school curriculum in Nevada ($25,000), relocating a single
kitchen in Alaska ($2 million), and building a public swimming pool
in Ottawa, Kan., ($100,000). These projects are often bought and
sold by lobbyists, who make sure helpful lawmakers receive hefty
campaign contributions. Under current projections, the money spent
on pork projects over the next decade could otherwise finance
one-quarter of the costs of Social Security reform.
That is the sort of trade-off President Bush and Congress must
assess: pork, corporate welfare and hundreds of outdated, wasteful
programs in areas Washington has no business meddling in, versus
long-term tax relief and Social Security reform. President Bush has
taken a solid stand with the 2005 omnibus bill. Now he must go much
is Grover M. Hermann Fellow in Federal Budgetary Affairs in the
Thomas A. Roe Institute for Economic Policy Studies at The Heritage
First appeared in Human Events.
Both tax relief and Social Security reform are endangered by the same culprit: runaway spending.
Brian M. Riedl
Grover Hermann Fellow in Federal Budgetary Affairs
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